<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS HORIZON FUND
SEPTEMBER 30, 1997
<PAGE>
ADVANTUS HORIZON FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND LIABILITIES 10
STATEMENT OF OPERATIONS 11
STATEMENTS OF CHANGES IN NET ASSETS 12
NOTES TO FINANCIAL STATEMENTS 13
INDEPENDENT AUDITORS' REPORT 18
FEDERAL INCOME TAX INFORMATION 19
SHAREHOLDER SERVICES 20
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholders:
The 1997 fiscal year has been a rewarding one for investors. On the equity side,
despite the anticipation of a market downturn, the equity market continued to
climb. Over the twelve month period ending September 30, 1997, the S&P 500*
gained 40.5 percent; over 26 percent of that gain was for the trailing six
months. We saw a slight market decline of 5.5 percent in August, but stocks
bounced back by the end of September.
As the stock market continues to push forward, some investors lose sight of the
importance of maintaining a position of their assets in bonds. Investors who
diversify their portfolio assets between stocks and bonds can better position
their portfolio in the event of stock market downturns. There was not a stock
market correction of major significance during this reporting period.
The bond market demonstrated strong performance throughout 1997. For the twelve
month period ending September 30, 1997, the Lehman Corporate Bond Index**
returned 10.8 percent. This is a 6 percent increase over last year's return.
Stable interest rates and low inflation have contributed to the bond market's
stellar performance.
Your Advantus Family of Funds includes a range of equity and bond offerings. I
recommend that you talk with your Ascend financial representative to ensure that
your portfolio has an appropriate balance for your situation. As we continue to
watch the stock market hit new highs, we cannot assume that upward moves are a
continuing trend.
In the pages that follow, the Fund's manager will give you more information
about the economy and conditions within the market that may have affected the
Fund during this reporting period. The manager will specifically discuss your
Advantus Fund's performance and share some strategies that were used to manage
the Fund.
We assert that a long-range view of investing provides the greatest benefit to
our shareholders. We encourage you to maintain a long-range view, and we believe
that you will derive the greatest benefit by doing so.
Sincerely,
/s/ Paul Gooding
Paul Gooding, President
Advantus Capital Management, Inc.
*The S&P 500 is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall. The Index includes
approximately 380 industrials, 10 transportations, 45 financials, and 65
utilities.
**The Lehman Corporate Bond Index includes all fixed-rate, publicly traded,
investment grade corporate debt with at least one year to maturity and $50
million par value outstanding.
<PAGE>
ADVANTUS HORIZON FUND
PERFORMANCE UPDATE
[PHOTO]
THOMAS A. GUNDERSON, CFA AND JEFFREY R.
ERICKSON, CFA
PORTFOLIO MANAGERS
The Advantus Horizon Fund is a mutual
fund designed for investors seeking
long-term growth of capital combined with
a moderate level of current income. The
Fund seeks to achieve its objective by
investing in equity securities
diversified among individual companies
and industries. The Fund invests
primarily in dividend-paying common
stocks of established companies with
strong long-term outlooks--but may also
invest in companies perceived to be
temporarily undervalued or which because
of new management, products or markets,
show promise of substantially improved
results.
-Dividends paid quarterly.
-Capital gains distributions paid annually.
PERFORMANCE
The Advantus Horizon Fund's performance for the year ended September 30, 1997
for each class of shares offered was as follows:
<TABLE>
<S> <C>
Class A........ 25.0 percent*
Class B........ 24.3 percent*
Class C........ 24.0 percent*
</TABLE>
PORTFOLIO RECAP
September 30, 1997 brought to a close another strong quarter and another strong
year for the market and for the Horizon Fund. During the first three quarters of
the fiscal year, market performance was driven by gains in large multinational
corporations, and by companies in the financial services sectors. Some of the
strength in the multinational firms was reversed in the fiscal last quarter, as
the strengthening dollar caused earnings shortfalls from international
operations. During the last fiscal quarter technology stocks surged, which
fueled the performance of the NASDAQ index** over the S&P 500+, and caused small
company stocks to outperform large company stocks. In addition, the healthy
economy helped cyclical stocks outperform stable growth stocks which allowed
value indices such as the Russell 1000 Value Index++ to outperform growth
indices such as the Russell 1000 Growth Index++.
During the year, performance of the Horizon Fund was helped by holdings in the
Financial, Consumer Cyclical and Capital Goods sectors. Stocks in the Financial
sector included T. Rowe Price and Sunamerica. The Consumer Cyclical group was
helped by retailers in general, Kohl's in particular, and by Omnicom as well.
(Kohl's was sold out of the Fund by year end due to significant price
appreciation and excessive valuation levels.) The Capital Goods sector was
boosted by holdings in Tyco International.
The Horizon Fund was held back by an underweight in technology hardware and in
energy related stocks. While the Fund has close to a market weight in
technology, many of the holdings are in computer services, which are high
quality companies with stable earnings growth. The stability in earnings
relative to the hardware related companies translates to less volatility in the
stocks prices. This quarter the volatility was upward for the hardware
companies, and in comparison our technology stocks , while up, fell behind these
companies. This allowed the return of the S&P 500+ to exceed that of the Horizon
Fund over the 12 month period. However, over time the market will likely reward
consistent earnings growth. Finally, the price of Columbia/ HCA, in the Health
Care sector, fell as a result of an ongoing federal investigation into the
company's billing practices.
2
<PAGE>
ADVANTUS
HORIZON FUND
SEPTEMBER 30, 1997
OUTLOOK
The economic environment has been fantastic for corporate profits, the
government and consumers. Inflation and interest rates are low, a balanced
federal budget is in sight, unemployment is at a 24 year low and consumer
confidence is at a 28 year high. Of course these factors have been a boon for
the stock market; it has done well because of these factors.
This has been a particularly good environment for lower quality companies as
measured by Standard and Poors. These companies tend to have more cyclical
earnings, which are currently at peak levels. It is interesting that these
companies are also more expensive than higher quality companies with more
predictable earnings growth. In other words, the market is paying to take risk.
While we are not predicting recession, we also do not believe that the economy
will always grow in a smooth upward curve. When we experience bumps in economic
growth, valuations tend to revert to normal, which will then favor the high
quality stable growth companies that we own in the Horizon Fund.
*Historical results are not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge. Investment returns and principal values will fluctuate so that shares
upon redemption may be worth more or less than their original cost.
**The NASDAQ Composite Index contains all Nasdaq National Market System issues,
as well as all domestic common stocks traded in the regular Nasdaq market.
+The S&P 500 is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall. The index includes
approximately 380 industrials, 10 transportations, 45 financials and 65
utilities.
++The Russell 1000 Growth Index and the Russell 1000 Value Index contain stock
from the Russell 1000 with greater than average growth orientation and low price
to book ratios, respectively. The Russell 1000 are the 1,000 largest companies
in the Russell 3000. The Russell 3000 is an unmanaged index of 3,000 common
stocks which represents approximately 98 percent of the U.S. market.
3
<PAGE>
ADVANTUS
HORIZON FUND
SEPTEMBER 30, 1997
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL
$10,000 INVESTMENT IN ADVANTUS HORIZON FUND,
S&P 500 AND CONSUMER PRICE INDEX
On the following three charts you can see how the total return for each of the
three classes of shares of the Advantus Horizon Fund compared to the S&P 500 (as
adjusted for dividend reinvestment) and the Consumer Price Index. The three
lines in the Class A graph represent the cumulative total return of a
hypothetical $10,000 investment made on September 30, 1987 through September 30,
1997. The three lines in the Class B and Class C graphs represent the cumulative
total return of a hypothetical $10,000 investment made on the inception date of
Class B and Class C shares of the Advantus Horizon Fund (August 19, 1994 and
March 1, 1995, respectively) through September 30, 1997.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 18.7%
Five year 14.0%
Ten year 11.3%
(Thousands) Class A S&P 500 CPI
9/30/1987 $10,000 $10,000 $10,000
10/31/1987 $7,439 $8,784 $10,249
10/31/1988 $8,276 $10,093 $10,686
10/31/1989 $10,124 $12,748 $11,175
10/31/1990 $9,535 $11,792 $11,879
10/31/1991 $13,241 $15,741 $12,226
10/31/1992 $14,606 $17,306 $12,618
10/31/1993 $15,710 $19,887 $12,956
9/30/1994 $15,935 $20,174 $13,348
9/30/1995 $19,881 $26,163 $13,642
9/30/1996 $23,307 $31,118 $14,052
9/30/1997 $29,124 $43,274 $14,363
</TABLE>
4
<PAGE>
ADVANTUS
HORIZON FUND
SEPTEMBER 30, 1997
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 19.3%
Since inception (8/19/94) 20.4%
(Thousands) Class B S&P 500 CPI
8/19/1994 $ 10,000 $ 10,000 $ 10,000
9/30/1994 $ 9,629 $ 9,951 $ 10,067
9/30/1995 $ 12,074 $ 12,905 $ 10,289
9/30/1996 $ 14,221 $ 15,349 $ 10,598
9/30/1997 $ 17,855 $ 21,345 $ 10,833
</TABLE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 24.0%
Since inception (3/1/95) 23.0%
(Thousands) Class C S&P 500 CPI
3/1/95 $10,000 $10,000 $10,000
9/30/95 $11,844 $12,169 $10,146
9/30/96 $13,778 $14,474 $10,450
9/30/97 $17,089 $20,128 $10,682
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial professional's investment advice. Individuals cannot buy even an
unmanaged index fund without incurring some charges and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS
HORIZON FUND
SEPTEMBER 30, 1997
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
% OF
MARKET STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------------------------------- --------- ----------- ------------
<S> <C> <C> <C>
General Electric Company....... 38,776 $ 2,639,192 5.1%
Intel.......................... 22,800 2,104,725 4.1%
Merck & Co., Inc............... 18,900 1,888,819 3.7%
Tyco International Ltd......... 19,312 1,584,791 3.1%
Service Corporation
International................ 48,600 1,564,313 3.0%
Johnson & Johnson.............. 25,800 1,486,725 2.9%
Omnicom Group.................. 20,206 1,469,987 2.9%
Safeway Inc.................... 26,291 1,429,573 2.8%
Philip Morris Companies,
Inc.......................... 33,600 1,396,500 2.7%
First Data Corporation......... 33,204 1,247,225 2.4%
----------- ---
$16,811,850 32.7%
----------- ---
----------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Technology 15.4%
Health Care 14.9%
Financial 12.4%
Consumer Staples 15.6%
Consumer Cyclical 20.5%
Communication Services 2.8%
Capital Goods 12.5%
Basic Materials 1.9%
Cash and Other
Assets/Liabilities 4.0%
</TABLE>
6
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1997
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ------------ ------------
<C> <S> <C>
COMMON STOCKS (96.0%)
BASIC MATERIALS (1.9%)
Chemicals (1.9%)
20,293 Praxair Inc.................................. $ 1,038,748
------------
CAPITAL GOODS (12.5%)
Electrical Equipment (4.9%)
38,776 General Electric Company..................... 2,639,192
------------
Manufacturing (3.0%)
19,312 Tyco International Ltd....................... 1,584,791
------------
Office Equipment (2.5%)
16,700 Danka Business Systems PLC (c)............... 743,150
16,700 Wallace Computer Services, Inc............... 615,813
------------
1,358,963
------------
Waste Management (2.1%)
27,423 USA Waste Services Incorporated (b).......... 1,093,492
------------
COMMUNICATION SERVICES (2.8%)
Telecommunication (1.1%)
18,700 ADC Telecommunications Inc. (b).............. 607,750
------------
Telephone (1.7%)
31,700 Cincinnati Bell Incorporated................. 901,469
------------
CONSUMER CYCLICAL (20.5%)
Auto (2.6%)
9,600 Danaher Corporation.......................... 556,800
11,800 Magna International, Inc. (c)................ 815,675
------------
1,372,475
------------
Houseware (1.0%)
12,300 Leggett & Platt Incorporated................. 548,119
------------
Leisure (1.3%)
20,711 GTECH Holdings Corporation (b)............... 708,057
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ------------ ------------
<C> <S> <C>
CONSUMER CYCLICAL--CONTINUED
Lodging--Hotel (2.2%)
25,700 Carnival Corporation......................... $ 1,188,625
------------
Retail (3.5%)
35,000 Family Dollar Stores......................... 798,438
11,250 Home Depot Inc............................... 586,405
13,900 Wal-Mart Stores, Inc......................... 509,088
------------
1,893,931
------------
Service (9.0%)
37,670 CUC International Inc. (b)................... 1,167,770
8,600 HFS Incorporated (b)......................... 640,162
20,206 Omnicom Group................................ 1,469,986
48,600 Service Corporation International............ 1,564,313
------------
4,842,231
------------
Textiles (.9%)
12,700 Nine West Group Inc. (b)..................... 499,269
------------
CONSUMER STAPLES (15.6%)
Beverage (1.9%)
17,000 Coca-Cola Company............................ 1,035,938
------------
Food (1.4%)
11,500 Conagra, Inc................................. 759,000
------------
Household Product (3.1%)
28,900 Newell Company............................... 1,156,000
7,000 Procter & Gamble Company..................... 483,438
------------
1,639,438
------------
Personal Care (.9%)
5,500 Gillette Company............................. 474,719
------------
Retail (3.7%)
9,400 CVS Corporation.............................. 534,625
26,291 Safeway Inc. (b)............................. 1,429,573
------------
1,964,198
------------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ------------ ------------
<C> <S> <C>
CONSUMER STAPLES--CONTINUED
Service (2.0%)
5,600 Automatic Data Processing Inc................ $ 280,000
20,252 Manpower..................................... 799,954
------------
1,079,954
------------
Tobacco (2.6%)
33,600 Philip Morris Companies, Inc................. 1,396,500
------------
FINANCIAL (12.4%)
Banks (1.3%)
11,150 Norwest Corporation.......................... 682,937
------------
Commercial Finance (1.4%)
8,000 Finova Finance Trust......................... 757,000
------------
Consumer Finance (1.6%)
13,599 Associates First Capital Corporation......... 846,537
------------
Finance--Diversified (1.0%)
15,200 Federal Home Loan Mortgage Corporation....... 535,800
------------
Insurance (4.2%)
11,328 American Internationl Group.................. 1,168,908
27,750 Sunamerica Incorporated...................... 1,087,453
------------
2,256,361
------------
Investment Bankers/Brokers (1.3%)
10,000 T. Rowe Price Associates..................... 672,500
------------
Savings and Loans (1.6%)
12,400 Washington Mutual Incorporated............... 864,900
------------
HEALTH CARE (14.9%)
Drugs (5.8%)
5,200 Eli Lilly & Company.......................... 626,275
18,900 Merck & Co., Inc............................. 1,888,819
12,000 Smithkline Beecham (c)....................... 586,500
------------
3,101,594
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ------------ ------------
<C> <S> <C>
HEALTH CARE--CONTINUED
Health Care--Diversified (4.3%)
12,600 Abbott Laboratories.......................... $ 805,613
25,800 Johnson & Johnson............................ 1,486,725
------------
2,292,338
------------
Hospital Management (.9%)
15,991 Columbia/HCA Healthcare Corporation.......... 459,740
------------
Managed Care (.9%)
10,100 United Health Care........................... 505,000
------------
Medical Product/Supplies (3.0%)
16,800 Medtronic Inc................................ 789,600
19,300 Sybron International Corporation (b)......... 828,694
------------
1,618,294
------------
TECHNOLOGY (15.4%)
8,200 Cisco Systems, Inc. (b)...................... 599,113
10,936 Computer Associates International............ 785,342
24,200 Equifax Incorporated......................... 760,788
33,204 First Data Corporation....................... 1,247,225
19,300 Galileo International Inc. (b)............... 539,194
22,800 Intel........................................ 2,104,723
5,900 Microsoft Corporation (b).................... 780,644
20,000 Parametric Technology Corporation (b)........ 882,500
15,750 Paychex Incorporated......................... 549,281
------------
8,248,810
------------
Total common stocks
(cost: $36,551,493)....................................... 51,468,670
------------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ------------ ------------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (5.3%)
$ 1,550,000 U.S. Treasury Bill........................... 4.924% 12/11/97 $ 1,535,019
145,000 U.S. Treasury Bill........................... 5.179% 10/02/97 144,984
1,180,000 U.S. Treasury Bill........................... 5.047% 11/06/97 1,174,311
------------
Total short-term securities (cost: $2,854,104)..................... 2,854,314
------------
Total investments in securities (cost: $39,405,597) (d)............ $ 54,322,984
------------
------------
</TABLE>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 4.0% of the net assets in foreign securities as of September
30, 1997.
(d) At September 30, 1997 the cost of securities for federal income tax purposes
was $39,468,772. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation..................... $15,249,730
Gross unrealized depreciation..................... (395,518)
---------
Net unrealized appreciation....................... $14,854,212
---------
---------
</TABLE>
9
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying schedule
for detailed listing (identified cost: $39,405,597).................. $ 54,322,984
Cash in bank on demand deposit........................................ 27,323
Receivable for Fund shares sold....................................... 52,179
Dividends receivable.................................................. 55,983
-------------
Total assets...................................................... 54,458,469
-------------
LIABILITIES
Payable for investment securities purchased........................... 734,737
Payable for Fund shares repurchased................................... 21,379
Payable to Adviser.................................................... 73,502
-------------
Total liabilities................................................. 829,618
-------------
Net assets applicable to outstanding capital stock.................... $ 53,628,851
-------------
-------------
Represented by:
Capital stock--authorized 10 billion shares (Class A--2 billion
shares, Class B--2 billion shares, Class C--2 billion shares and 4
billion shares unallocated) of $.01 par value (note 1)............. $ 23,426
Additional paid-in capital.......................................... 32,759,753
Accumulated net realized gains from investments..................... 5,928,285
Unrealized appreciation on investments.............................. 14,917,387
-------------
Total--representing net assets applicable to outstanding capital
stock............................................................ $ 53,628,851
-------------
-------------
Net assets applicable to outstanding Class A Shares................... $ 40,191,660
-------------
-------------
Net assets applicable to outstanding Class B Shares................... $ 11,683,601
-------------
-------------
Net assets applicable to outstanding Class C Shares................... $ 1,753,590
-------------
-------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 1,742,946............................... $ 23.06
-------------
-------------
Class B--Shares outstanding 521,312................................. $ 22.41
-------------
-------------
Class C--Shares outstanding 78,348.................................. $ 22.38
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<S> <C>
Investment income:
Interest............................................................ $ 67,627
Dividends........................................................... 415,008
------------
Total investment income......................................... 482,635
------------
Expenses (note 4):
Investment advisory fee............................................. 369,628
Distribution fees--Class A.......................................... 108,113
Distribution fees--Class B.......................................... 88,081
Distribution fees--Class C.......................................... 13,577
Administrative services fee......................................... 43,200
Custodian fees...................................................... 10,873
Auditing and accounting services.................................... 16,983
Legal fees.......................................................... 2,792
Directors' fees..................................................... 827
Registration fees................................................... 34,199
Printing and shareholder reports.................................... 31,855
Insurance........................................................... 5,297
Other............................................................... 29,791
------------
Total expenses.................................................. 755,216
Less fees and expenses waived or absorbed:
Class A distribution fees......................................... (18,019)
------------
Total net expenses.............................................. 737,197
------------
Investment loss--net............................................ (254,562)
------------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3).......................... 6,455,409
Net change in unrealized appreciation or depreciation on
investments........................................................ 4,155,265
------------
Net gains on investments.......................................... 10,610,674
------------
Net increase in net assets resulting from operations.................. $ 10,356,112
------------
------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS HORIZON FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Operations:
Investment loss--net................................................ $ (254,562) $ (209,509)
Net realized gains on investments................................... 6,455,409 8,181,489
Net change in unrealized appreciation or depreciation on
investments........................................................ 4,155,265 (1,636,711)
------------ ------------
Increase in net assets resulting from operations................ 10,356,112 6,335,269
------------ ------------
Distributions to shareholders from net realized gains on investments:
Class A........................................................... (6,782,073) (2,112,129)
Class B........................................................... (1,445,269) (194,725)
Class C........................................................... (225,564) (19,544)
------------ ------------
Total distributions............................................. (8,452,906) (2,326,398)
------------ ------------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A........................................................... 7,456,668 6,636,439
Class B........................................................... 4,460,062 3,313,209
Class C........................................................... 937,063 853,733
Proceeds from issuance of shares as a result of reinvested
dividends:
Class A........................................................... 6,665,984 2,076,351
Class B........................................................... 1,433,925 190,286
Class C........................................................... 223,868 19,544
Payments for redemption of shares:
Class A........................................................... (9,667,961) (13,750,830)
Class B........................................................... (949,523) (377,718)
Class C........................................................... (506,920) (32,264)
------------ ------------
Increase (decrease) in net assets from capital share
transactions................................................... 10,053,166 (1,071,250)
------------ ------------
Total increase in net assets.................................... 11,956,372 2,937,621
Net assets at beginning of year....................................... 41,672,479 38,734,858
------------ ------------
Net assets at end of year............................................. $ 53,628,851 $ 41,672,479
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(1) ORGANIZATION
The Advantus Horizon Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. The Fund's investment objective is to seek
long-term growth of capital combined with a moderate level of current income.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class A
shares at net asset value after a specified holding period. Such holding periods
decline as the amount of the purchase increases and range from 28 to 84 months
after purchase for Class B shares and 40 to 96 months after purchase for Class C
shares. All three classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that the level of
distribution fees charged differs between Class A, Class B and Class C shares.
Income, expenses (other than distribution fees) and realized and unrealized
gains or losses are allocated to each class of shares based upon its relative
net assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price, by an independent pricing service or at a price deemed best to
reflect fair value as quoted by dealers who make markets in these securities.
When market quotations are not readily available, securities are valued at fair
value as determined in good faith under procedures adopted by the Board of
Directors. Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend date and
interest income, including amortization of bond premium and discount computed on
a level yield basis, is accrued daily.
13
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no income tax provision is required.
The Fund's policy is to make required minimum distributions prior to December
31, in order to avoid federal excise tax.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary book-to-tax
differences. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income (loss) or realized gains (losses) were
recorded by the Fund.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
undistributed net investment income by $254,562, decrease accumulated net
realized gains from investments by $254,574 and increase additional paid in
capital by $12.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, are declared and paid
quarterly. Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the year ended September 30, 1997, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$32,170,154 and $32,269,499, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital
Management, Inc. (Advantus Capital or the Adviser), a wholly-owned subsidiary of
MIMLIC Asset Management Company (MIMLIC Management). Under the agreement,
Advantus Capital manages the Fund's assets and provides research, statistical
and advisory services and pays related office rental and executive expenses and
salaries. In addition, as part of the advisory fee, Advantus Capital pays the
expenses of the Fund's transfer, dividend disbursing and redemption agent, The
Minnesota Mutual Life Insurance Company (Minnesota Mutual), the parent of MIMLIC
Management. The fee for investment management and advisory services is based on
the average daily net assets of the Fund at the annual rate of .80 percent.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to Ascend Financial Services,
Inc. (Ascend), formerly known as MIMLIC Sales Corporation, the underwriter of
the Fund and wholly-owned subsidiary of MIMLIC Management, to be used to pay
certain expenses incurred in the distribution, promotion and servicing of the
Fund's shares. The Class A Plan provides for a fee up to .30 percent of average
daily net assets of Class A shares. The Class B and Class C Plans provide for a
fee up to 1.00 percent of average daily net assets of Class B and Class C
shares, respectively. The Class B and Class C 1.00 percent fee is comprised of a
.75 percent distribution fee and a .25 percent service fee. Ascend is currently
waiving that portion of Class A distribution fees which exceeds, as a percentage
of average daily net assets, .25 percent. Ascend waived Class A distribution
fees in the amount of $18,019 for the year ended September 30, 1997.
14
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reporting fees, legal fees, auditing and accounting services fees,
organizational costs and other miscellaneous expenses.
The Fund pays an administrative services fee, equal to $3,600 per month, to
Minnesota Mutual for accounting, auditing, legal and other administrative
services which Minnesota Mutual provides.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $269,005.
As of September 30, 1997, Minnesota Mutual and subsidiaries and the
directors and officers of the Fund as a whole owned 36,882 Class A shares which
represents 2.1 percent of the total outstanding Class A shares.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $2,792.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the years ended September 30, 1997 and 1996 were
as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- -------------------- --------------------
1997 1996 1997 1996 1997 1996
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold.............................................. 343,891 311,359 216,042 157,638 44,666 40,501
Issued for reinvested distributions............... 344,511 104,307 76,153 9,781 11,895 994
Redeemed.......................................... (437,803) (644,637) (45,438) (17,831) (23,117) (1,540)
---------- ---------- --------- --------- --------- ---------
250,599 (228,971) 246,757 149,588 33,444 39,955
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
</TABLE>
15
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(6) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------
PERIOD FROM
NOVEMBER 1,
YEAR ENDED SEPTEMBER 30, 1993 TO YEAR ENDED
---------------------------------- SEPTEMBER 30, OCTOBER 31,
1997 1996 1995(a) 1994(b) 1993
-------- -------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 23.07 $ 20.94 $ 17.34 $ 17.64 $ 16.73
-------- -------- -------- ------- ------------
Income from investment
operations:
Net investment income
(loss)..................... (.08) (.10) (.03) -- .05
Net gains or losses on
securities (both realized
and unrealized)............ 4.89 3.51 4.17 .25 1.20
-------- -------- -------- ------- ------------
Total from investment
operations............... 4.81 3.41 4.14 .25 1.25
-------- -------- -------- ------- ------------
Less distributions:
Dividends from net
investment income.......... -- -- -- -- (.05)
Distributions from capital
gains...................... (4.82) (1.28) (.54) (.55) (.29)
-------- -------- -------- ------- ------------
Total distributions....... (4.82) (1.28) (.54) (.55) (.34)
-------- -------- -------- ------- ------------
Net asset value, end of
period....................... $ 23.06 $ 23.07 $ 20.94 $ 17.34 $ 17.64
-------- -------- -------- ------- ------------
-------- -------- -------- ------- ------------
Total return (d).............. 25.0% 17.2% 24.8% 1.4% 7.6%
Net assets, end of period (in
thousands)................... $ 40,192 $ 34,435 $ 36,040 $ 31,387 $ 30,015
Ratio of expenses to average
daily net assets (e)(f)...... 1.43% 1.41% 1.41% 1.43%(g) 1.31%
Ratio of net investment income
(loss) to average daily net
assets (e)(f)................ (.39)% (.43)% (.15)% (.01)%(g) .27%
Portfolio turnover rate
(excluding short-term
securities).................. 71.5% 84.7% 46.8% 43.5% 47.0%
Average commission rate on
stock transactions (i)....... $ .0661 $ .0763 N/A N/A N/A
</TABLE>
- ------------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995, the
Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) During 1994, the Fund changed its fiscal year end from October 31 to
September 30.
(c) Commencement of operations.
(d) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total returns presented are not
annualized.
16
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------ -----------------------------------------
PERIOD FROM PERIOD FROM
AUGUST 19, YEAR ENDED MARCH 1,
YEAR ENDED SEPTEMBER 30, 1994(c) TO SEPTEMBER 30, 1995(c) TO
---------------------------------- SEPTEMBER 30, --------------------- SEPTEMBER 30,
1997 1996 1995(a) 1994 1997 1996 1995
-------- -------- -------- --------------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 22.65 $ 20.74 $ 17.33 $ 17.11 $ 22.67 $ 20.75 $ 17.52
-------- -------- -------- ------ -------- -------- ------
Income from investment
operations:
Net investment income
(loss)..................... (.19) (.19) (.10) (.01) (.20) (.15) (.06)
Net gains or losses on
securities (both realized
and unrealized)............ 4.77 3.38 4.05 .23 4.73 3.35 3.29
-------- -------- -------- ------ -------- -------- ------
Total from investment
operations............... 4.58 3.19 3.95 .22 4.53 3.20 3.23
-------- -------- -------- ------ -------- -------- ------
Less distributions:
Dividends from net
investment income.......... -- -- -- -- -- -- --
Distributions from capital
gains...................... (4.82) (1.28) (.54) -- (4.82) (1.28) --
-------- -------- -------- ------ -------- -------- ------
Total distributions....... (4.82) (1.28) (.54) -- (4.82) (1.28) --
-------- -------- -------- ------ -------- -------- ------
Net asset value, end of
period....................... $ 22.41 $ 22.65 $ 20.74 $ 17.33 $ 22.38 $ 22.67 $ 20.75
-------- -------- -------- ------ -------- -------- ------
-------- -------- -------- ------ -------- -------- ------
Total return (d).............. 24.3% 16.3% 23.7% 1.3% 24.0% 16.3% 18.4%
Net assets, end of period (in
thousands)................... $ 11,684 $ 6,219 $ 2,592 $ 97 $ 1,754 $ 1,018 $ 103
Ratio of expenses to average
daily net assets (e)(f)...... 2.18% 2.19% 2.24% .30%(h) 2.18% 2.19% 2.24%(g)
Ratio of net investment income
(loss) to average daily net
assets (e)(f)................ (1.13)% (1.19)% (1.05)% (.13)%(h) (1.14)% (1.17)% (1.13)%(g)
Portfolio turnover rate
(excluding short-term
securities).................. 71.5% 84.7% 46.8% 43.5% 71.5% 84.7% 46.8%
Average commission rate on
stock transactions (i)....... $ .0661 $ .0763 N/A N/A $ .0661 $ .0763 N/A
</TABLE>
- ------------
(e) The Fund's Adviser and Distributor voluntarily waived or absorbed $52,961 in
expenses for the year ended September 30, 1995. If the Fund had been charged
with these expenses, the ratio of expenses to average daily net assets would
have been 1.57% for Class A, 2.25% for Class B and 2.25% for Class C. The
ratio of net investment income (loss) would have been (.31%) for Class A,
(1.05%) for Class B and (1.13%) for Class C.
(f) The Fund's Distributor voluntarily waived $18,019, $28,836, $51,147 and
$48,807 in Class A distribution fees for the years ended September 30, 1997
and 1996, the period ended September 30, 1994 and the year ended October 31,
1993, respectively. If Class A expenses would have been charged for these
fees, the ratio of expenses to average daily net assets would have been
1.48%, 1.50%, 1.61% and 1.49%, respectively. The ratio of net investment
income (loss) to average daily net assets would have been (.44%), (.52%),
(.19%) and .09%, respectively.
(g) Adjusted to an annual basis.
(h) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
(i) Beginning is fiscal 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of stocks for
the period by the total number of related shares purchased and sold.
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus Horizon Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Horizon
Fund, Inc. (the Fund) as of September 30, 1997 and the related statement of
operations for the year then ended, the statement of changes in net assets for
the two years then ended and the financial highlights for the three years then
ended, the period from November 1, 1993 to September 30, 1994 and for the year
ended October 31, 1993. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased but not received, we request confirmations
from brokers, and where replies are not received, we carry out other appropriate
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of September 30, 1997 and the results of its operations,
changes in its net assets and financial highlights for the periods stated in the
first paragraph above, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 7, 1997
18
<PAGE>
ADVANTUS HORIZON FUND
FEDERAL INCOME TAX INFORMATION
The following information for federal income tax purposes is presented as an
aid to shareholders in reporting the distributions paid by the Fund in the
fiscal year ended September 30, 1997. Dividends for the 1997 calendar year will
be reported to you on Form 1099-Div in late January 1998. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A, CLASS B AND CLASS C
Capital gains distribution--taxable as long-term capital gains
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ------------------------------ -----------
<S> <C>
December 19, 1996............. $ 4.8227
-----------
-----------
</TABLE>
19
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make four exchanges or telephone transfers between the Funds
each calendar year without incurring a transaction charge. Thereafter, there
will be a $7.50 transaction charge for each additional exchange or transfer
within the calendar year. Systematic Exchange Plans are exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account-subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE TRANSFER: You may transfer money from one Advantus account to any
other Advantus account you own just by calling our toll free number. Sign up for
telephone exchanges on the Advantus Application or complete the telephone
authorization form.
SYSTEMATIC TRANSFER: If you have an Advantus Money Market account you may
transfer a set amount of money to another Advantus Fund to diversify your
investment portfolio and take advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums out of your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus's non-money market funds.
SPECIAL PURCHASE PLANS: Our special purchase plans enable you to open an
Advantus Fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets). One of these plans--The
Automatic Investment Plan--allows you to invest automatically each month from
your checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Individual Retirement Account or other qualified plan including SEPS, SIMPLE,
profit sharing, money purchase or defined benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account. Amounts
over $1,000 may be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. Sign up for
20
<PAGE>
telephone redemption on the Advantus Application or complete a Service Request
Form. To have the redemption automatically deposited into your checking account,
please send a voided check from your bank. Depending on the performance of the
underlying investment options, the value may be worth more or less than the
original amount invested upon redemption. Some limitations apply, please refer
to the prospectus for details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
reports to help you track all of your investments in the Advantus Family of
Funds, and annual tax statements. Semi-annual and annual reports will provide
you with portfolio information, fund performance data and the current investment
outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call (1-800-665-6005).
Our voice response system is available from 7 a.m. to 3 a.m. Central Time Monday
through Friday, and 8 a.m. to 5 p.m. on Saturday. This system allows you to
access current net asset values and your account balances.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through your local
registered representative of Ascend Financial Services, Inc. (formerly known as
MIMLIC Sales Corporation), distributor of the Funds. Contact your representative
for information and a prospectus for any of the Advantus Funds you are
interested in.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc. manages twelve mutual funds containing
$2.5 billion in assets in addition to $1.8 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 11 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
21
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS-TM- FAMILY OF FUNDS LOGO]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-888-AFS-1838
(1-888-237-1838)
<PAGE>
ASCEND FINANCIAL SERVICES, INC. BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
FORWARDING AND RETURN POSTAGE GUARANTEED,
ADDRESS CORRECTION REQUESTED
F.48637 Rev. 11-1997
